4/26/2010 @ 3:40PM

Why Everyone Distrusts Both Business And Government

People have distrusted both business and government for decades. Since Gallup began measuring public trust in 1976, 19% of people polled have held a “very high” or “high” opinion of the honesty and ethics of business executives. Public trust in congressmen has been even feebler, averaging just 15%. So current low levels of trust are not just the result of recent scandals.

There is evidence to suggest that the levels of trust in the two institutions are related. The high-water mark for both came in 2001, when the Gallup poll found them each favored by 25% of people. The scores for 2008, the all-time low, were also identical, at 12%.

In any event, public trust in both business and in government is in dire straits. That isn’t surprising, given the collapse of the U.S. housing market and the financial crisis and subsequent bailouts. The 2009 Edelman Trust Barometer reports that 84% of the American public holds business responsible for causing the financial credit crisis and 81% holds the government and regulators responsible.

How exactly are public trust in business and public trust in government related? You get to the answer by asking a question: Why do people trust their own congressman but distrust Congress as a whole? They do tend to do that.

In 1993 Suzanne Parker and Glenn Parker wrote an article for The Journal of Politics that asked just that question. They started seeking an answer by examining how personal contact, such as meeting with a representative, affected trust in that person, and found that it didn’t make enough of a difference to provide an explanation. They then went on to find that trust in a whole system–in Congress or in business, as opposed to individuals–is driven by “perceptions of waste, economic outlook, and socioeconomic status,” and that “perceptions that the state and federal government are wasting tax dollars lead to lower levels of system trust.” Your view of the system as whole may not shape your opinion of any one individual, but it is easy to see how in a time of recessions and bailouts a broad sense of waste and inefficiency could bring down your general respect for both government and business in tandem.

Furthermore, that level of trust or distrust in a whole system tends to be shaped by shared opinions and narratives about how things do or don’t work. Research has shown that when a person hears an opinion expressed three times, he or she will typically believe it to be widely held. Experiments by the psychologist Solomon Asch explain why that matters.

Asch demonstrated that when we perceive opinions to be widespread, they shape how we see the world–even when the incorrectness of those opinions should be obvious. He had conspirators identify two unequal straight lines as being of equal length. Surprisingly many people would go along with them. Popular opinion defeated the basic rules of geometry 37% of the time.

What does that tell us about building trust in government and business? The U.S. Postal Service–the most trusted federal agency every year in the Ponemon Institute’s annual survey–offers some clues.

First, the Postal Service almost always delivers. Second, there is little perceived waste associated with it. You can send a letter across the country for just 44 cents. Third, people know the names and faces of their mail carriers. Fourth, there are harsh penalties for violating the sanctity of the mail. Fifth, violations are extremely rare, because people believe in and respect the system.

Forging a new way forward, leaders in business and government must actively question their own narratives about both systems. Open dialogue can help weed out false opinions and lead to action in the mutual interest of all parties. The public doesn’t see business or government as solely responsible for the financial mess. It does expect these two great vehicles for social cooperation to collaborate efficiently in ways that serve its interests.

If business and government leaders can work together to build confidence in the financial system, trust in business and government may well rise too.

Brian Moriarty is associate director for communications of the Business Roundtable Institute for Corporate Ethics and is co-author of the report The Dynamics of Public Trust in Business: New Opportunities for Leaders.